India, US ink inter-governmental agreement to implement FATCA

India and United States have signed inter-governmental agreement to implement the Foreign Account Tax Compliance Act (FATCA).
It was signed by Revenue Secretary Shaktikanta Das and US Ambassador to India Richard Verma in New Delhi.
The agreement will promote transparency on tax matters and curb offshore tax evasion by exchange of information between the two countries. It is obligatory on signatories to exchange a wide range of financial information among themselves automatically and periodically.
Henceforth, Indian financial institutions will have to reveal information about US tax payers to the revenue department. This information will be further passed on to the US tax authorities. In turn, the US will also share similar kind of financial information with India.
Under the provisions of FATCA, it is mandatory for all financial institutions outside of the US to periodically transmit information on financial accounts held by US citizens to its US Internal Revenue Service. If they failed to do so they will face a 30 percent withholding tax on payments made from the US.

Month: Current Affairs - July, 2015